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Thursday, November 12, 2015

Production halted at Sebree Mine

County expects to lose as much as 1/3 of funding currently used for county programs

On Friday, Alliance Resource Partners (ARLP) issued WARN notices to employees at Sebree Onton #9 Mine and ceased all production operations at that site. While some employees will be given the opportunity to transfer to other locations, at least 140 miners now find themselves without jobs. But the impact of the closing is expected to stretch much further than just the employees affected by that closing.County hard hit by lossWebster County Judge Executive James “Jim” Townsend estimated that the county will see a one third reduction in the amount of LGEA money that comes in from the state due to a loss in coal taxes.

Kentucky Revised Statute (KRS) 42.455 created the LGEA during the Patton Administration, setting those funds asside for coal counties to improve the quality of life for local residents. “That money will just go away,” said Townsend. “Those LGEA (Local Government Economic Assistance) dollars fund the senior citizens program, our fire departments, meals on wheels, the Webster County Dog Shelter and even the Sheriff’s Department.”

Possibly the hardest hit area, however, will be the county’s solid waste and recycling program. The county currently operates two solid waste and recycling centers that are free for county residents and property owners, but the program is funded with LGEA dollars.“We’ll have to do something with solid waste,” Townsend said.

One possible outcome, according to Townsend, is that residents will have to pay a per bag rate on all garbage disposed of at the solid waste centers. Not only will that impact rural residents, it will also be a hit on residents of Clay and Dixon where the city doesn’t provide curb-side trash pickup.

“We were very fortunate to have Sebree Mine as long as we did,” Townsend said. “Chester Thomas opened the mine just as Webster County Coal (Dotiki) relocated to Hopkins County. They carried us and allowed us to keep providing services to county residents.”

Although Dotiki returned to Webster County two years ago, Townsend said the dollars coming back to the county have continued to decline. The county expected to get between $7-800,000 in Local Government Economic Development Fund (LGEDF) dollars in the last quarter, but only recieved $108,000. Those funds are used to diversify the local economy into the future beyond coal mining, by allowing counties to develop their infrastructures, including roadways.

“When you expect $800,000 and only get $108,000, there are things you can’t cover,” he said. “With the loss of Sebree Mine, I don’t know how I will be able to sleep tonight. “I really don’t know what it means. We’ll just have to see what we can do and what we have to cut moving forward. We will have to stop some programs.”

He added that he wishes the best for the miners directly affected by the mine closing.“This will deeply impact our entire county,” said State Representative Jim Gooch of Providence. “I just hope that a lot of the folks from Sebree Mine will be able to get placed somewhere else.”

Gooch was very clear on what he thought was behind the closing.

“It’s just another example of all the things coming out of Washington that have impacted the coal mining industry,” he said. “The president is using every agency he has, including the EPA, the Army Corps of Engineers and MSHA to wage a war on coal. Webster County is feeling the effects of it.”

Economic impactAccording to the 2015 edition of Kentucky Coal Facts (KCF), prepared by the Kentucky Energy and Environmental Cabinet and the Department of Energy Development and Independence, 19.1 percent of Webster County’s population was directly employed by a coal mine in 2014. That does not include individuals employed in the coal haulage industry (rail, train or barge) or outside businesses that supply goods, supplies and fabrication serves for the mines.

Statewide in 2014, KCF estimated that the 11,586 coal miners (down from 18,085 in 2011) created an additional 13,030 jobs, either through company spend or by the wages spent by miners in other business, meaning every coal mining job created 1.12 other jobs in the surrounding area.

Using that figure, the loss of just 140 jobs in Sebree could amounts to a total loss of 296.8 jobs in the surrounding area.

Oversupply of coalA week prior to the announcement, ARLP CEO Joe Craft stated that a reverse trend in the last quarter had led to an oversupply in coal inventories.

“Due to this oversupply, our increasing inventories and our customers’ focus on their short-term supply needs, ARLP has curtailed production by reducing unit shifts and will continue to produce below our installed capacity for the foreseeable future, which may include some near-term shifting of production to our lowest-cost mines,” Craft stated. “We will work to mitigate this reduction in production and sales volume by lowering our costs and capital expenditures.

“The market has to demand our coal at reasonable prices before ARLP will increase its production,” he added.

Sebree Mine was not the only ARLP mine that found itself on the chopping block Friday. Alliance also issued WARN notices at Gibson County Coal, LLC, where 120 miners are expected to be out of work as the company cuts one and a half production units at its Gibson North and Gibson South mines.

ARLP is the third largest eastern coal producing company in the United States, having sold 39.7 million tons of coal in 2014. The company operates seventeen locations in Kentucky, Illinois, West Virginia, Maryland and Pennsylvania. ARLP purchased Webster County-based Sebree Mine in 2012.